Good morning, and welcome to the United Therapeutics Corporation First Quarter 2020 Earnings Call. My name is Mariana, and I will be your conference operator today. [Operator Instructions]. I will now turn the conference call over to Mr. Dewey Steadman, Head of Investor Relations of United Therapeutics.

Good morning. It's my pleasure to welcome you to the United Therapeutics Corporation First Quarter 2020 Earnings Call. Accompanying me on today's call are Dr. Martine Rothblatt, our Chairman and Chief Executive Officer; Mr. Michael Benkowitz, our President and Chief Operating Officer; Mr. James Edgemond, our Chief Financial Officer; and Leigh -- Dr. Leigh Peterson, our Vice President of Product Development. Remarks today will include forward-looking statements representing our expectations or beliefs regarding future events. These statements involve risks and uncertainties that may cause actual results to differ materially. Our latest SEC filings, including Form 10-K and 10-Q contain additional information on these risks and uncertainties. We assume no obligation to update these forward-looking statements. Today's remarks may also include financial measures that were not prepared in accordance with U.S. Generally Accepted Accounting Principles or GAAP. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in our earnings release available on our website at www.unither.com. Today's results or today's remarks may discuss the progress and results, potential trials or other developments with respect to our products. These remarks are intended solely to educate investors and are not intended to serve as the basis for medical decision-making or to suggest that any products are safe and effective for any unapproved or investigational uses. all prescribing information for the products is available on our website. Now, I will turn the call over to Dr. Rothblatt for an overview of our first quarter 2020 financial results and business activities of United Therapeutics. Dr. Rothblatt?

Thank you, Dewey. Good morning, everybody. I'd like to start providing a overview of how we are at the beginning or toward the end of the first month of the second quarter here looking back on the past quarter. And then I'm going to turn the mike over to Michael Benkowitz, our President and Chief Operating Officer, and he will continue to offer you operating results of the company. Then we'll open up the call to questions and they can be directed either to Mike or I or to our Chief Financial Officer James Edgemond or to our Vice President for Product Development, Dr. Leigh Peterson. So looking back on the past quarter, I think that there were really three key themes that I have to summarize what's gone on in the past quarter. And those three themes I would label as stable, stronger, and sustainable. So let me delve into each of stable, stronger and sustainable for a moment and talk about what those words or concepts mean in the concept of -- in the context of United Therapeutics right in the middle of this COVID pandemic. So what we call the stable, the first theme, I am really glad to share that our drug manufacturing, distribution, and reimbursement have been very stable during this past quarter, notwithstanding the COVID pandemic. Every one of United Therapeutics offices and laboratories from California to North Carolina, from Maryland to Florida, from Massachusetts to Virginia, and New Hampshire have all remained open as essential biomedical research and production facilities. Our staff has continued to operate these facilities on a shift basis to reduce occupancy and to maintain physical distancing in all regards. As a result, our production numbers this past quarter has enabled us to still maintain more than two years of…

Let me mention one other thing why I'm so excited about this. This is really the -- other than our activities in cancer, this is the first time that United Therapeutics has undertaken an expansion of its franchise beyond pulmonary hypertension. Just so I didn't like confuse somebody here, this CFILD indication, this fibrosis indication will be in patients who don't have pulmonary hypertension. Now I mentioned about a quarter of the patients in INCREASE had the pulmonary hypertension with the pulmonary fibrosis. But in fact, the number of patients who have the pulmonary fibrosis without the pulmonary hypertension is about four times larger, well over 100,000 patients. So this TRITON study that will embark upon in the first quarter of 2021 will be United Therapeutics first on non-cancer Phase III study outside of the field of pulmonary hypertension and in a patient population that is several times larger than the pulmonary hypertension population, and finally with a mechanism of action that appears to us to actually be disease modifying based on the positive improvement in the FVC showing in those patients. So all told, by expanding beyond pulmonary hypertension and doing so with a solidly data-backed hypothesis and then the patient population several times larger than we're addressing in pulmonary hypertension, I think that there really is no doubt that we have emerged from the first quarter of 2020 with a stronger pipeline than we had even before. The third theme that I want to talk about before turning things over to Michael is sustainable. It's very fortunate and I would say that our entire pulmonary hypertension community has been blessed that COVID has not disproportionally impacted the pulmonary hypertension population. There are very various hypothesis of why this is. I think you know the kind of the Occam's…

Let me mention one other thing why I'm so excited about this. This is really the -- other than our activities in cancer, this is the first time that United Therapeutics has undertaken an expansion of its franchise beyond pulmonary hypertension. Just so I didn't like confuse somebody here, this CFILD indication, this fibrosis indication will be in patients who don't have pulmonary hypertension. Now I mentioned about a quarter of the patients in INCREASE had the pulmonary hypertension with the pulmonary fibrosis. But in fact, the number of patients who have the pulmonary fibrosis without the pulmonary hypertension is about four times larger, well over 100,000 patients. So this TRITON study that will embark upon in the first quarter of 2021 will be United Therapeutics first on non-cancer Phase III study outside of the field of pulmonary hypertension and in a patient population that is several times larger than the pulmonary hypertension population, and finally with a mechanism of action that appears to us to actually be disease modifying based on the positive improvement in the FVC showing in those patients. So all told, by expanding beyond pulmonary hypertension and doing so with a solidly data-backed hypothesis and then the patient population several times larger than we're addressing in pulmonary hypertension, I think that there really is no doubt that we have emerged from the first quarter of 2020 with a stronger pipeline than we had even before. The third theme that I want to talk about before turning things over to Michael is sustainable. It's very fortunate and I would say that our entire pulmonary hypertension community has been blessed that COVID has not disproportionally impacted the pulmonary hypertension population. There are very various hypothesis of why this is. I think you know the kind of the Occam's…

Thanks, Martine. I wanted to spend a few minutes just talking about the commercial side of the business. Overall, we were very pleased with our revenue performance in the first quarter. As we mentioned quite often, our revenues reflect sales of our treprostinil based products to specialty pharmacy distributors who typically place monthly orders based on current patient utilization trends and contractual inventory requirements. Therefore, our sales do not always track the volumes our distributors are dispensing to patients in a given time period. So I'd like to provide some color around physician and patient demand for our products in the first quarter. And then, in addition, I'll touch on some early Q2 data we're seeing as a result of COVID-19. So in the first quarter back to our commercial business as a result of COVID-19 either in terms of distributor ordering patterns, which are represented by our revenues or as measured by active patients on our therapies, new patient starts, and drug expense to patients. In fact Q1 saw us build on the momentum from last year as we once again reached an all time high number of patients using one of our treprostinil medicines. read: key:

Finally, Unituxin continues to hum along through Q1. Year-over-year revenues grew 7% in Q1, but actual dispenses of Unituxin and the hospitals increased in the 15% to 20% range. So we're pleased with how this product is performing and are looking forward to filing our supplement soon to expand the label to include relapsed refractory neuroblastoma. Now, in terms of potential COVID-19 impact in the second quarter, it's a bit of a mixed bag thus far. On the one hand one of our specialty pharmacy distributors placed a larger than normal order for our treprostinil based products during April to increase its inventory beyond typical levels. And this was done for three reasons. First, they wanted to account for potential increased investigational use for TYVASO for acute respiratory distress syndrome resulting from COVID-19, which is a major cause of patient morbidity and mortality. Second, they wanted to prepare for an anticipated increase in patient requests for 60 to 90-day refills, that's compared to their typical 30-day supply. And third, they wanted to increase their inventory levels across various locations to ensure uninterrupted business continuity during the pandemic. On the other hand, we have seen some softening in new patient prescriptions throughout the month and also a softening in new patient starts in the last couple of weeks. We believe this is due to the inability of patients to visit their physician's office to determine whether our medicines may be appropriate. However, we are starting to hear that some institutions in various parts of the country are gearing up to start allowing patients to come back in for visits very soon. And we are aware of the increased use of telemedicine with PAH physicians. How this impacts revenues over the balance of the quarter of the year remains unclear. We don't know how long the reduction in new patient prescriptions and new patient starts will last, but we certainly expect some pent up demand that should come through in later months once things start to normalize. It's also unclear whether these events will even materially impact orders from specialty pharmacy distributors since they place orders based on current utilization trends and contractual inventory requirements. And so I think just kind of coming back to Martine, Martine's theme around sustainability, we certainly think that the commercial side of the business remains sustainable. The patients are there, they will continue to need our medicines. When they're able to access those is a little bit unclear given the current dynamics of the pandemic. But we expect that once things start to normalize, as I said, there'll be a pent up demand and we'll get those patients started on our medicines appropriately. And so with that, I'll turn the call back over to Martine.

Thanks so much, Mike. Operator, if you could now open up the lines and have on Dewey Steadman -- I think Dewey, did you want to take the calls or you want me to?

Oh, no. You can --

Okay.

Operator, go ahead and open the Q&A first --

Okay. Thanks. I just like to say hi to [indiscernible] on the line. Thanks, Dewey. Okay. Operator, can open up the calls.

Thank you. [Operator Instructions]. Your first question comes from Chris Shibutani with Cowen. Your line is open.

errors:

Thanks, Chris. Interesting question. I'm going to ask Mike if he could please respond to you.

Yes, so we get some visibility into the reasons for the switchback. We don't get total visibility, but anecdotally what we hear from physicians and through the channel is that patients are experiencing either adverse events, worsening of symptoms, in some cases hospitalizations when they make the switch over to generic treprostinil. I think we all know that while the FDA considers the generic version to be the same as the brand version they do allow for some variances and because these are very, very sick and very, very fragile patients I think we can hypothesize that those differences become magnified in a very fragile patient population, and so as a result we've seen actually increase in the number of patients that have transitioned back to branded Remodulin.

Thanks, Mike.

Got it.

Thanks, Chris. Operator, next question.

Your next question comes from Eun Yang with Jefferies. Your line is open.

Thank you. So because of the COVID-19 impact there are several studies, clinical trials have been positive for new patient enrolment. So one of them is the dry powder inhaler Treprostinil Technosphere. So with that, I guess we are not expanding -- expecting the data by mid this year. Then question is, by when the study has to resume in order for us to see the data this year? Thank you.

Sure. Very interesting question. And I'm going to ask Dr. Peterson who's in charge of that study to answer it. But just so I want to keep everything in perspective while she's compiling her answer. When the COVID pandemic began to fall down upon us the first thing that we were concerned with of course was to make sure that all of the distribution channels and everybody were set and were solid so everybody could get their medicine. And as I mentioned in my opening remarks, we have done that very, very well. Now, our clinical trials, they presented a interesting situation in that the default situation would be that you might have to just like stop the clinical trial and then restart it all over again, which would be unfortunate. So we worked very, very hard again to make sure that our clinical trials were not stopped but that just that the enrollment in them of new patients was suspended so that as hospitals are opening up and you heard Mike Benkowitz mention previously that some of these centers are now beginning to open up and see patients again that we could without really missing a beat continue the enrollment of the patients. So even though we've suspended new enrollment, the patients who already in the BREEZE trial that you're referring to the PERFECT trial that I mentioned of our COPD, the Ralinepag trial, which involves patients all over the world that we have to get them their clinical trial material, we have been doing all of that throughout the entire COVID situation without missing a beat. So speaking of beats, Dr. Peterson, she's a drummer. Would you like to provide little more insight on the timeframe around BREEZE right now?

Yes, sure, thank you. So this BREEZE study as you may already know is a study where patients who are on TYVASO are transitioned over to our trade T formulation with the dry powder and the device that we have with MannKind. And so we had -- so this study was actually 45-patient study. It's not very big. FDA has agreed to this. And we're about a third of the way through enrollment. In fact, the study's primary endpoint is taken at three weeks after the patient starts. And so we were lucky enough to have had all of the patients who are currently enrolled to complete that period so we won't have missing data on the ongoing patients. the:

Thanks so much, Dr. Peterson. Thank you, Eun. Operator, next call, please.

Your next question comes from Hartaj Singh with Oppenheimer & Co. Your line is open.

Great, thank you. And thank you for all the work United Therapeutics is doing on behalf of Martine and stay safe. I just had one question on Orenitram. You had I think a 20% growth in the fourth quarter, 18% this quarter. Can you just give us some color on where that's coming from, is that your new patients are getting maybe a little bit of market share from Uptravi, any color there I would really appreciate it. And again, thank you for all the work.

Thank you so much, Hartaj, and thank you for acknowledging our efforts on COVID. We have just heard briefly before a segway over to Mike to address the question on where the Orenitram growth is coming from. We have a cell therapy product in patients with COVID and two parallel arts initiatives for patients who are suffering the worst consequences of COVID as well as an advanced form of our total artificial one device to be an alternative to the intubation and sedation that's necessary with current ventilator. So we have quite a bit of activity going on directly in COVID and most importantly taking care of everybody and making sure everybody's safe. So thanks for that recognition, Hartaj. Mike, can you talk about where the Orenitram growth is coming from?

Sure. Thanks, Orenitram. It's kind of wide. Let me just sort of step back and obviously point out the obvious, which is we had the label expansion for Orenitram come through in October, reflecting the FREEDOM-EV data. And so we've had about really about quarter-and-a-half now of being able to promote from a sales and marketing standpoint on the new data. So that is certainly, I think helped because I think as we've said on these calls, and as we talked about in the press release last week, the data really when you look at it in its totality is pretty compelling. And so I think that message is getting through to physicians. And so, when we look at where the growth is coming from, as I said, it's really three areas, it's hard for me to guess at this point to say how much is attributed to each. But I would say first it's coming from patient staying on therapy, increasing their dose. So that's -- that's one piece of that. The second piece of it is just new patient growth generally and that's obviously a big part of it. We're continuing to see really nice -- really nice trends in terms of patients on therapy, and then underlying that is new prescribers. So prescribers that either had never used a Orenitram or had used it early on after the FREEDOM-M trial and for whatever reason stopped using that. I kind of define it as new prescriber as somebody that has not used it at all or has not prescribed within say the 12 months prior to writing. So we certainly see some increases there and particularly among, I think the KOLs, the more experienced PAH physicians that maybe used initially went away from it. I think the ED data has really, I think compelled them to come back and take another look and they're giving it another try.

Thanks so much, Mike. Operator, next call, please.

Your next question comes from Jessica Fye with JPMorgan. Your line is open.

Great, good morning. Thanks for taking my question. Can you please walk through the plan development program and regulatory strategy for your RemoPro candidate the IND for which I believe cleared in the first quarter? Do you need to run efficacy trials there or just show like pain and safety compared to Remodulin, and if I could just follow-up on Hartaj's question, I'm curious about the potential interplay between the new starts on Orenitram and the slight year-over-year decline in Tyvaso? So do you think any of the Orenitram growth came at the expense of new Tyvaso starts?

Sure. So why don't we have Mike, since we're already on the Orenitram team answer your second question. And then Mike, if you could pass the call to Dr. Peterson for her to talk a little bit about the anticipated timeline on RemoPro.

Sure. Yes, so I don't really -- it's adjusted. At some level, it's hard to know exactly. But what I can tell you in terms of looking at just sort of in terms of whether a doctor saying okay, I want to use Orenitram instead of where I would have otherwise used Tyvaso. So that's a little harder to get insight to. But at a patient trend level in terms of active patients, our active patients on Tyvaso are up about 10% year-over-year. So we're continuing to add to our Tyvaso active patient count as we're adding to our Orenitram count. So I don't -- I mean, so I'm sure those trade-offs are being made on the margins but in general, the front-end module on to the franchise as a whole continues to grow across the three products. So it's hard to say that one is cannibalizing the other. But again, I think at an individual physician model there, yes that that may be entering into their into the calculus but at kind of macro level, we're seeing growth across the board.

Absolutely sustainable, I love it. Leigh?

Yes. So for RemoPro I will say I'll give you the answer of what our statistician always tells me when I ask questions like this, it depends. It depends on the result. And as you probably already know, we are in Phase 1 looking at these, the RemoPro products, the Pro drugs of treprostinil with regard to pain, and also the pharmacokinetics. In the pharmacokinetics, we're looking at are not only of the Pro drug itself, so in that case, it's the parent molecule, but also of treprostinil which is really the metabolite, if you will, of the Pro drugs. And so with as far as the development program goes, it depends on what we see in the PK results. And so but what we're shooting for and we're looking for the compounds that that best show this is a Pro drug that is injected and very quickly converts to treprostinil and has a high treprostinil level relative to the control which would be basically injecting treprostinil, the parent compound as Remodulin. So if we have good conversion of the Pro drug and we reach treprostinil levels comparable to that with the parent drug, we can FDA has said that we don't need to do an efficacy study because we've already shown that treprostinil works and so if we have good conversion to treprostinil, we're good. And then, so what we do have to do is a safety study. And again that also depends on conversion. If there's a lot of the Pro drugs in the patients, we will do a safety study it. We have asked for about a 45 patient safety study for this. And again, this would be to show that the Pro drug that's in the system prior to conversion is safe. And so that's -- that's the plan that we don't have to do an efficacy study. We have feedback from FDA on that. But again, it's providing that we do get what we're expecting, which is a high conversion of the Pro drug to treprostinil and showing comparable treprostinil blood levels from that product.

Excellent. Thank you so much, Dr. Peterson. Operator, next question.

Your next question comes from Liana Moussatos with Wedbush Securities. Your line is open.

Thank you. What percent of treprostinil prescriptions are new versus refill?

Good morning, Liana. Thank you for the question. What percentage of treprostinil prescriptions are new versus refill? I think once again, Mike Benkowitz should be the best person on the call to answer that question.

Yes, Liana, that's a good one. I don't know if I have that off the top of my head. Let me well actually think about that for a second. It's --

Half, more than half, less than half of new.

It's less than -- in terms of new prescriptions each day. I think about it each month. It's definitely less than half. It's probably on the order of about 5% to 10%.

Okay.

Thanks Mike. Thanks, Liana. Next call and this will have to be I believe the last one, operator.

Your next question comes from the line of Martin Auster with Credit Suisse. Your line is open.

Hey Martine, how are you. I'm really, really excited to hear the progress with Tyvaso and the TRITON study that you're planning and so to that effect, I'm super pumped to see the increased data. I know that you're working with ATS on a virtual presentation but I guess from the website need to get clear they're going to have that format available. If that is not available by mid-May, are you planning to just make a separate kind of company sponsored presentation of the data? And then the second one would be just a quick follow-up for Leigh on Jessica's question on RemoPro is that Phase I currently enrolling volunteers and when do you think we might get some data on the PK and the tolerability profile of that product?

Yes, thanks, Marty for both questions. I think both are pretty much in Leigh's daily work. So Lee, can you talk about what you're thinking is in terms of TRITON and the ATS on the latest information that we have in terms of what kind of data presentation would be possible there.

Yes. So we are planning, we've been accepted to ATS for our presentation, it will be a virtual presentation for the increased results, the full results and but we not got the timing on that. So I'm sorry, I can't give you a specific date. They haven't given us one. We just in this summer and we've also submitted those results to a journal. And it's under review right now. And we expect this year anytime now their comment and to publish that full publication this summer as well. So, one way or another, we'll have the results to you very soon, and then we too are very, very excited. So thank you. Thank you for saying that. It's truly a blessing to have those types of results come in our lifetime.

Thanks so much, Leigh. James a few, we have our Chief Financial Officer on the phone and it's really important, I think for everybody on the call to appreciate what an amazing job and difficult job it is in the midst of a pandemic to be able to go ahead and closeout the year, complete your year-end audit, gather all the necessary financial information for 10-Q. Not to mention the processing of well over a million dollars a day in account payables to go to all of the right places and none of the wrong places and to do all of this remotely. It's a tremendous testament to the -- really the strength and stability of the United Therapeutics as a business organization to move so smoothly through this pandemic without missing a beat. So, since nobody asked a question specifically for James, I would like to ask him to say a word or two from the topic of our quarterly earnings. James?

Yes, Martine, thank you very much for the opportunity. A couple of things come to mind as you mentioned kind of the processes, the whole organization has in place really to execute, whether it's your end of the quarter, as we all tend to work remotely. So it's certainly within all the groups that we've talked about from the R&D, to manufacturing, the advance teams and all the administrative functions that I think is a real testament. The other thing that's very important is the realization of the strength around the balance sheet. As we entered COVID-19 and as we continue during this pandemic, from a financial stability perspective, we're well-capitalized to be able to continue to execute on our research and development program as we make sure we take care of our patients as well as our fellow Unitarians. And it's really important for people to realize that strength as we continue during this time that we're able to execute as an organization which should be reassuring to many, both listeners on this call and again patients and people in the organization. So I just thought those were two things that I think are very important to mention. And I appreciate the opportunity to allow me to do that. So back to you.

Thanks so much, James. Well, operator, we've had a great chance to address most of the people in queue and the line and thank you so much for organizing the call. Everybody on the phones, thank you for your continued support for United Therapeutics. Our hearts go out to those of you who have loved ones or friends that are suffering directly from the COVID pandemic health wise for sure, economic wise, otherwise and for those of you who are related to frontline healthcare workers, our complete admiration and respect for everybody who is out there fighting on the frontline. Operator, you can wrap up the call.

Thank you for participating in today's United Therapeutics Corporation conference call. A re-broadcast will be available for replay for one week by dialing 1 (800) 585-8367 with international callers dialing 1 (416) 621-4642 and using access code 1984097.